David Speers: Now we’re going to move on and bring in our political panel this hour. We’re joined by Parliamentary Secretary Andrew Leigh, and Shadow Parliamentary Secretary Arthur Sinodinos. Thank you both very much for joining us. Now look, I just want to pick up on that quickly if we can; Holden are now in talks on how to cut production costs. It’s likely to mean lower wages and fewer conditions if the workforce agree to it. But Mike Devereux saying there, they’re making it pretty clear there that they want the level of industry support to continue. Arthur Sinodinas, is the Coalition sticking by its plan to cut this $500 million?

Arthur Sinodinos: What we’re talking about there, David, is cutting some of the extra assistance that was provided by Labor since it’s been in office. We’re also committed to a review by the Productivity Commission about the whole assistance arrangements around the automotive sector and I think that’s our rigorous way to go and get some evidence-based policy-making around this. The challenge the automotive sector have today is even as Labor has put more money in in order to preserve or even expand jobs, the sector’s actually been shedding jobs. And so this is creating that sort of question in the minds of the public: well ok, are we really in a sense throwing good money after bad, if you like, and what are we getting in return? That’s not an argument for closing the sector down, that’s an important sector and we’re committed to the sector, but we want a rigorous approach as part of considering assistance for the sector going forward, and we were always committed from when we were in government to having a Productivity Commission review before any further assistance was provided.

David Speers: Andrew Leigh, as an economist, can you really say that this level of industry support is in the best interests of the economy as a whole?

Andrew Leigh: Well David, the reason we’re providing industry assistance to the car industry is because of the spill-overs to other sectors, because of the benefits that you get to the rest of manufacturing, and the benefits to research and development. I certainly appreciate Arthur’s commitment to evidence-based policy-making, it’s a commitment that I share as well. But the challenge is, as Mike Devereux highlighted, that when there’s uncertainty, it makes it very difficult for his firm to plan for the future. And so the Coalition’s policy has an admirable level of scrutiny, but the practical effect of that is to cause real difficulties for someone like Mike Devereux, making investment decisions into the future, not knowing whether there’s $500 million stripped out or maybe even more as a result of the review the Coalition is committed to.

David Speers: Mike Devereux is not a politician, but I tell you what, he’s pretty clever on the diplomacy here because he was careful not to tread on Coalition toes too much. And Similarly on the carbon tax as well. But I think he’s making it pretty clear that it’s one factor at least that does add to the cost of production in Australia. It hard to deny that, isn’t it?

Andrew Leigh: We’ve always been clear, David, that a carbon price would add to CPI. It adds about 0.7 per cent to CPI, about a third of the impact of introducing the GST. But the reason you have a carbon price, and the reason that the Howard Government wanted a carbon price before the 2007 election is it’s just the most efficient way of dealing with carbon pollution. That’s why today you’ve seen Shenzen, a province of China with ten million people setting up its own emissions trading scheme.

David Speers: But not the sort of carbon price, it’s about to go up over the next couple of weeks to over $24/tonne here in Australia. It’s one of the reasons car makers like Holden are doing it tough.

Andrew Leigh: The net effect of the carbon price, David, on total costs in the economy has actually ended up being less than we had projected beforehand. We’ve provided considerable household assistance, which for most households has more than offset the price effect. Were you to strip it away now, effectively you would be putting Australia in a much worse position because the alternative to a carbon price is the sort of command-and-control approach which Mr Abbott has pioneered: much more expensive, much less efficient.

David Speers: Alright, I know Arthur Sinodinos will want to jump in on that but we do need to take a quick break. Stick with us though and there’s a few other issues I want to cover as well. For New Zealand viewers New Zealand news next for you but stay with us as this continues on PM Agenda

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David Speers: Let’s back to our panel. We’re talking to Labor’s Andrew Leigh and the Coalition’s Arthur Sinodinos. Now, I do want to move on and we’ll get to the ongoing, never ending, leadership issues that are dogging the Labor Party all week it seems. But initially the Coalition Party room today, Arthur Sinodinas, on the referendum that’s coming up at this election as well on whether to recognise local government in the Constitution. Just firstly, are you in favour of this?

Arthur Sinodinos: In terms of recognising local government in the Constitution?

David Speers: Yeah

Arthur Sinodinos: I think we’ve got to fix up the anomaly that the High Court has identified. The problem we’ve had, and this is more the front bench, because we discussed this as a shadow ministry some time back, was the concern that this has been rushed a bit and that maybe with a bit more time it would be possible to build more of a consensus around this. I think if we’re coming up to what’s going to be a pretty frenetic election, I don’t think the referendum necessarily gets the attention it deserves. Now, it may be there are some Labor strategists who think it’s a bit of a distraction but our view in the shadow ministry was if they want to as a government put this up, ok, there should be equal funding, and that was, I think, the understanding on which…

David Speers: And this is the thing, there’s not. It’s ten and a half million for the ‘Yes’ case and half a million for the ‘No’ case.

Arthur Sinodinos: And us poor senators don’t get counted, this was done on the basis that there were only two in the House who voted for the ‘No’ case.

David Speers: Yeah so given all of that and the disparity in the funding, do you still support the ‘Yes’ case?

Arthur Sinodinos: Look, we will support it being put forward but I think you’ll find within the Liberal Party there are some very strong views, both for and against, there are for example people who argue that, you know, if you entrench local government in the Constitution, what impact does that have on the states and the powers of the states? So, if you’re a West Australian Liberal, for example, now you’d be quite concerned about the impact on state rights. A lot of this comes down to the view about, you know, what is the appropriate sort of balance within the Constitution on these issues. But where I think Abbott in particular has been coming from was a concern that unlike, say, the agreement that was stuck on the indigenous referendum which is essentially, let’s do it in a way that maximises the chances of it getting up, this has been a bit rushed and a bit sort of bowdlerised on the way through.

David Speers: I’m intrigued to, Andrew Leigh, see what position you take on this and what you expect Canberrans to do on this because, of course, we don’t have local government in the ACT.

Andrew Leigh: That’s right, David. So we’re one jurisdiction that isn’t affected by this - but certainly for most Australians what this would do is to regularise a system that’s already in place. So, if your local council is expecting Commonwealth funding - for a local organisation, or to fix the local bridge - then you ought to be supporting this referendum because it allows that Commonwealth funding to flow with a constitutional guarantee. If it doesn’t go through, the only way your local council is going to be able to fix that bridge is by raising rates.

David Speers: Now, let me move on, because we’ve only got a couple of minutes left, to the leadership issue. Where are you at on this, Andrew Leigh, what’s your view on what’s going on and what do you think should happen?

Andrew Leigh: My view, David, is I’m finding so many of these questions being raised, I’ve had lots of conversations about this all week - and they’ve all been with journalists. So this is a huge issue for the Parliamentary Press Gallery who are utterly engulfed on this topic. But I represent Canberra, what the Americans would call an ‘inside the beltway seat’, and I can tell you that when I was out doorknocking Nicholls on the weekend, no one was talking about this.

David Speers: So, just to be clear, are you saying, because we hear this every time, that it’s a media creation?

Andrew Leigh: I’m not saying it’s a media creation, I’m simply saying that it is not the main concern of my electors who are focused on DisabilityCare, the National Broadband Network, health and education. These, I think, are the most important issues for people in Australia’s capital city.

David Speers: Nobody is saying to you, you need to do something about the leadership?

Andrew Leigh: No. I mean, it’s not the feedback I get when I’m out doorknocking.

David Speers: Ok, but just to be clear though do you support a change or not?

Andrew Leigh: No. Prime Minister Gillard will lead us to the next election.

David Speers: And Arthur Sinodinos, you’ve seen some of this stuff before on the…

Arthur Sinodinos: I’m not agitating for leadership change anywhere!

David Speers: I’ve seen you issuing press releases pointing out various Labor MPs that standing by Julia Gillard. You clearly think she’s lead in the saddlebags for Labor candidates.

Arthur Sinodinos: I’d be less than honest if I didn’t admit that when we were out doorknocking, particularly in NSW places like Western Sydney, the Prime Minister is an issue in terms of her capacity to cut through.

David Speers: But do you really think Kevin Rudd would fix everything for Labor?

Arthur Sinodinos: I don’t believe that. The reason I don’t believe that, even though the polls suggest he could do a little bit better, is at the end of the day it seems to be a debate over the personality as opposed to the policy issues and I think that’s, from the public’s point of view, that’s one of the reasons they see this as a bit of a soap opera now, that it’s too much about two camps as opposed to policy issues. I mean, for example, we don’t know what Kevin Rudd would do about the boat people situation, whether he would improve on that. On Gonski, I’m a bit sort of puzzled as to where he actually stands for example. So, what we’re being offered is the idea that he’s somehow a celebrity and cult figure who could attract people back. I think the Australian public have gotten to the stage where they just want the election, they just want a majority government, and they just want to get on with things.

Andrew Leigh: By contrast, the leadership issue within the Coalition is actually a very big policy difference.

David Speers: Well I don’t know that it’s quite the leadership issue that we’re seeing in Labor at the moment. But look, we will have to leave it there; we’re out of time. Andrew Leigh, Arthur Sinodinas, good to talk with you.